Electricity CHAOS coming up ——How many jobs will the new Labor Governmen save at Ergon . when the AER IMPOSES CUTS —Along with cuts of up to 35 per cent in planned spending, the regulator has sliced the assumed interest rate included by the distributors in their spending to 7.15 per cent, down from 8.83 per cent previously. “Perceptions of risk increased during the global financial crisis, but are now decreasing. This means that the lower cost of capital for debt and equity translates into the lower financing costs necessary to attract efficient investment,” Ms Conboy said. The deep cuts will enable the distributors to cut charges, reversing the steep rise in their charges which has occurred over the past five years.

“The demand for electricity is falling which puts less strain on the networks and requires less investment to provide a reliable supply of energy. These draft determinations reduce the spending proposals to ensure that only prudent and efficient costs are recovered from consumers,” said Paula Conboy, the newly installed chair at the AER.

Households could expect reductions of an estimated 10 per cent in their electricity bills in 2015/6, followed by “small increases” over the following three years, she said.

Along with cuts of up to 35 per cent in planned spending, the regulator has sliced the assumed interest rate included by the distributors in their spending to 7.15 per cent, down from 8.83 per cent previously.

“Perceptions of risk increased during the global financial crisis, but are now decreasing. This means that the lower cost of capital for debt and equity translates into the lower financing costs necessary to attract efficient investment,” Ms Conboy said.

The deep cuts will enable the distributors to cut charges, reversing the steep rise in their charges which has occurred over the past five years.

The tough regulatory approach will hit the amount raised from the planned privatisation of the power distributors. Earlier this week, the Baird government outlined $20 billion in spending from the funds raised through the sale of the so-called ‘poles and wires’ of the electricity network – a move for which it is seeking electoral support at the March state election.